EU Pork Prices to Remain Subdued in 2015

EU - Increased pork production and the continuing impact of the Russian import ban are likely to lead to pig prices remaining relatively low over 2015, analysts at BPEX say.

Based on the December census results, new estimates from the EU Commission’s working group on pig meat forecasts suggest that the increased production will continue into the first half of 2015 but supplies may tighten later in the year.

According to many predictions, 2014 was supposed to be a good year for EU pig producers. With feed prices low, supplies relatively tight and positive prospects for exports, if not for domestic demand, profitability should have been good.

The Russian ban changed all that and supplies were a little more plentiful than anticipated, particularly in the second half of the year. As a result, in the autumn and early 2015, producers were losing money rapidly.

Latest figures from the EU December pig census show that the total number of pigs was just over one per cent up on December 2013, while the EU breeding herd recorded a marginal increase.

Given the poor profitability of EU producers in recent months, any expansion may come as a surprise. However, the main price falls only occurred in the autumn and so December would have been too early for the effect to be readily apparent.

Sow slaughterings in some countries have reportedly been much higher since the autumn, suggesting the breeding herd may now be starting to contract again.

Based on the group’s figures and official estimates from other Member States, pig slaughterings in the first two quarters of this year will be up by over two per cent year on year.

The situation in the second half of the year is more difficult to forecast, as it depends on the extent of any breeding herd reduction, but the working group estimates that EU production will be little changed from the same period last year.

The group, therefore, considered that EU pig prices would remain subdued throughout 2015, albeit recovering slightly from the recent lows.